SUPPORTING STATE-OWNED ENTERPRISE

REFORM IN THE PHILIPPINES

OECD Business and Finance Policy Papers, No. 84

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Supporting state-owned
enterprise reform in the
Philippines

The Philippines has undertaken significant legal and institutional reforms to

strengthen the governance of its state-owned enterprises (SOEs). However,
important challenges remain. This paper assesses the current SOE
landscape in the Philippines against the OECD Guidelines on Corporate
Governance of State-Owned Enterprises. It identifies key areas for
improvement and provides insights and guidance to policy makers for future
reforms.

This paper is part of the series “OECD Business and Finance Policy Papers”,
https://doi.org/10.1787/bf84ff64-en.

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© OECD 2025.
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Foreword

State-owned enterprises (SOEs) are important players in the Philippine economy. Therefore, ensuring that
they operate transparently and efficiently is essential for economic growth and competitiveness. This policy
paper examines key issues in the current SOE landscape in the Philippines to help the country better align
its SOE sector with established international best practices, as outlined in the revised OECD Guidelines
on Corporate Governance of State-Owned Enterprises (“SOE Guidelines”). The report offers key
takeaways for policymakers to advance SOE reform in the country.
It was requested by the Government of the Philippines, as enhancing SOE accountability is a key pillar of
the Philippine Development Plan (PDP) 2023-2028 and was funded by the Government of Japan as part
of its initiative to enhance the investment environment in Southeast Asia.
The paper is based on: i) information submitted by Philippine authorities, including responses to OECD
questionnaires; ii) desk research conducted by the OECD Secretariat; iii) insights from relevant
stakeholders, including government officials and SOEs gathered during a fact-finding mission to Manila in
December 2024; as well as (iv) feedback from discussions held at the OECD Working Party on State
Ownership and Privatisation Practices in October 2024 and the Meeting of the OECD-Asia Network on
Corporate Governance of State-Owned Enterprises in December 2024.
This policy paper was developed by the Capital Markets and Financial Institutions Division of the OECD
Directorate for Financial and Enterprise Affairs. It was prepared by Özge Uluskaradag, with inputs on
sections 1.2 and 1.6 from Maria Zelenova. The project was managed by Chung-a Park, Programme
Manager, under the supervision of Sara Sultan, Head of the State-Owned Enterprise Unit, and Serdar
Çelik, Head of Division. Delegates from the Working Party provided valuable inputs. Special thanks are
extended to Alexander Böhmer and Akane Nozawa from the OECD Global Relations and Cooperation
Directorate.
Special thanks are attributed to Governance Commission for Government-Owned or -Controlled
Corporations of the Philippines (GCG) for their project support and cooperation. Valuable input was
provided by Philippine authorities and stakeholders, including GCG Chairperson Marius P. Corpus,
Commissioners Brian Keith F. Hosaka and Geraldine Marie B. Berberabe-Martinez, and Executive Director
Johann Carlos S. Barcena, as well as representatives from the Department of Finance (DOF), the
Department of Budget and Management (DBM), the Department of Foreign Affairs (DFA), the Securities
and Exchange Commission (SEC), the Commission on Audit (COA), the Philippine Competition
Commission (PCC), the National Economic and Development Authority (NEDA), and selected SOEs.

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Table of contents

Foreword 4
Abbreviations and acronyms 6
Executive summary 8
1 State ownership landscape in the Philippines 10
1.1. Overview of the Philippines’ state-owned sector 10
1.2. SOEs in the marketplace 19
1.3. Equitable treatment of shareholders and other investors 24
1.4. Disclosure and transparency requirements 25
1.5. Board composition and responsibilities in state-owned enterprises 30
1.6. Sustainability 34

References 38
Notes 40

TABLES
Table 1. Aggregate data on GOCCs in the Philippines, end-2023 13
Table 2. Data on the five largest GOCCs in the Philippines, end-2023 14
Table 3. Key institutions involved in the ownership, oversight or regulation of SOEs in the Philippines 18
Table 4. Information disclosure requirements for GOCCs 26

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Abbreviations and acronyms

ACIP Anti-Corruption and Integrity Programme

AO Administrative Order
ASEAN Association of Southeast Asian Nations
BTR Bureau of Treasury
CEO Chief Executive Officer
CPSE Commercial Public Sector Entities
COA Commission on Audit
CPCS Compensation and Position Classification System
DBM Department of Budget and Management
DBP Development Bank of the Philippines
DOF Department of Finance
DOH Department of Health
DRRM Disaster Risk Reduction and Management
DSWD Department of Social Welfare and Development
EESG Economic, Environmental, Social and Governance
EO Executive Order
FTA Free Trade Agreement
GAAP Generally Accepted Accounting Principles
GCG Governance Commission for Government-Owned or -Controlled Corporations
GCE Government Corporate Entities
GDP Gross Domestic Product
GFI Government Financial Institutions
GHG Global Greenhouse Gas
GICP Government Instrumentalities with Corporate Powers
GOCC Government-Owned or Controlled Corporations
GSIS Government Service Insurance System
CSR Corporate Social Responsibility Principles
IAS International Audit Service
IAU International Audit Unit
ICRS Integrated Corporate Reporting System
IFC International Finance Cooperation
IFRS International Financial Reporting Standards
IPSAS International Public Sector Accounting Standards
ITSF Inter-Agency Technical Working Group for Sustainable Finance
JMC Joint Memorandum Circular
LBP Land Bank of the Philippines
MC Memorandum Circular
MIC Maharlika Investment Corporation
NCP National Competition Policy
NDC Nationally Determined Contribution
NEDA National Economic and Development Authority
PBB Performance Based Bonus

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PCA Philippine Competition Act

PCC Philippine Competition Commission
PDP Philippine Development Plan
PEZA Philippine Economic Zone Authority
PFRS Philippine Financial Reporting Standards
RA Republic Act
SEC Securities and Exchange Commission
SOE State-Owned Enterprise
SSS Social Security System
UNFCCC United Nations Framework Convention on Climate Change

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Executive summary

State-owned enterprises (SOEs) – referred to locally as government-owned or -controlled corporations, or

GOCCs – play a vital role in the Philippine economy, operating in sectors such as finance, transportation,
energy and utilities. There are 53 majority-owned unlisted enterprises employing 3 857 people and 66
statutory or quasi-corporations employing over 120 000 people. The largest GOCCs operate in finance,
and two stand out as potential candidates for future stock market listing, depending on regulatory and
market conditions. Despite their importance, GOCCs represent only 0.25% of total formal employment
below the OECD average of 2%.
The Philippines significantly improved the framework for ownership and corporate governance by enacting
the GOCC Governance Act of 2011. The law established the Governance Commission for Government-
Owned or -Controlled Corporations (GCG), which is an ownership coordination agency. GCG fulfils state
ownership functions in coordination with the Department of Finance (DOF), the Department of Budget and
Management (DBM), and the supervising line ministry to which an SOE is attached. GOCCs are classified
as chartered GOCCs created by special law, which have distinct mandates and governance structures,
and non-chartered GOCCs organised under the revised Corporation Code of the Philippines, which
operate under a corporate framework similar to private enterprises.
The GOCC law sets out the state’s ownership policy and mandates accountability and performance
evaluation standards for GOCCs. GCG has professionalised state ownership through the development of
an “Ownership and Operations Manual” and established a competitive board appointment procedure,
along with other corporate governance requirements outlined in the Code of Corporate Governance for
GOCCs. GCG’s publicly accessible database, the Integrated Corporate Reporting System (ICRS), tracks
GOCC performance and key non-financial information related to SOE governance, which has raised
transparency and accountability of GOCCs.
The Philippines is committed to improving SOE governance in line with international best practices outlined
in the OECD Guidelines on Corporate Governance of State-Owned Enterprises. Against this backdrop,
this policy paper has identified the following key takeaways for policy makers to consider for future reform:
Enhancing state ownership responsibilities. Enhancing GCG’s responsibilities and oversight of GOCCs
may support better alignment of GOCCs with the state’s financial targets, risk tolerance, and sustainability-
related expectations, consistent with the state’s ownership policy. Periodic reviews of the Ownership and
Operations Manual can help ensure it reflects evolving governance practices and stakeholder input. To
foster competitive remuneration for SOE boards and management – while remaining within the parameters
of the Compensation and Position Classification System (CPCS) and fiscal constraints – periodic market
assessments could play a role in informing future adjustments.
Ensuring competitive neutrality. GOCCs are subject to the Philippine Competition Act (PCA) of 2015
and the GOCC Governance Act of 2011. The Philippine Competition Commission (PCC) has authority to
investigate anti-competitive behaviour, although it has not yet taken enforcement actions towards GOCCs.
Improved inter-agency collaboration, particularly between the GCG, the PCC and relevant regulatory
agencies, can enhance the detection and prevention of anti-competitive practices. Reviewing public

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procurement processes which tend to favour SOEs, including through direct government contracts, could
help address competitive neutrality. Clear separation between regulatory and commercial functions within
GOCCs is also encouraged to address potential conflicts of interest.
Enhancing disclosure and transparency. GOCCs follow national accounting standards consistent with
internationally recognised standards, but are not subject to independent external audits, except in certain
cases. The Commission on Audit (COA) – the supreme audit institution – is the only audit institution
responsible for public sector entities including GOCCs. Requiring commercially oriented GOCCs to
undergo external independent audits would provide assurances as to their financial reporting.
Despite improved data accessibility through ICRS, inconsistent compliance hinders full transparency.
While GOCC boards are annually evaluated for timely and accurate reporting, stronger enforcement
mechanisms, including penalties for non-compliance, would improve adherence to reporting standards.
Additionally, strengthened disclosure requirements for state subsidies would increase transparency in how
GOCCs utilise government support to meet public service obligations.
Improving board autonomy and independence. Board appointments are centralised, with formal
appointment powers to select GOCC directors from GCG shortlists vested with the President. While
independent directors are sometimes appointed, there is no formal requirement for their presence on
boards or board committees. Aligning board nomination and composition with international best practices
would enhance board autonomy and independence, while reducing the risk of undue political interference.
Training and capacity-building programmes for board members could also be further enhanced.
Ensuring the equitable treatment of shareholders. The Code of Corporate Governance for GOCCs
requires related-party transactions to be conducted at arm’s length to prevent conflicts of interest. Effective
implementation of existing provisions, along with enhancing legislation and corporate governance
standards more generally, would strengthen investor confidence and market integrity.
Integrating sustainability-related considerations in the ownership policy. Integrating expectations
regarding sustainability-related matters, including their financial and non-financial disclosures for GOCC
can help to better track GOCCs alignment with national sustainability-related commitments. Updating the
GOCC Governance Act of 2011 to include explicit sustainability-related expectations for GOCCs would
ensure policy coherence with the government’s stated low-carbon transition and greenhouse gas
emissions reduction goals.

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1 State ownership landscape in the

Philippines

State-owned enterprises (SOEs) are important players in the Philippine economy (GCG, 2024[1]).
Therefore, ensuring that they operate transparently and efficiently is essential for economic growth and
competitiveness. This policy paper examines key issues in the current SOE landscape in the Philippines
to help the country better align its SOE sector with established international best practices, as outlined in
the revised OECD Guidelines on Corporate Governance of State-Owned Enterprises (“SOE Guidelines”)
(OECD, 2024[2]).
The paper is organised around the main pillars of the SOE Guidelines. The first section provides an
overview of the Philippine SOE sector, including the size and sectoral distribution of SOEs, as well as the
legal, regulatory and institutional framework for their ownership and governance. The second section
explores SOEs in the marketplace, focusing on current policy frameworks that aim to level the playing field
between SOEs and the private sector, as well as remaining challenges. The third section addresses the
equitable treatment of shareholders and other investors, examining how existing laws and regulations
ensure fairness for SOE shareholders.
The fourth section discusses the current financial and non-financial disclosure requirements. The fifth
section focuses on board composition and nomination practices, exploring the responsibilities of SOE
boards and assessing whether boards possess the necessary authority, competencies, objectivity to
perform their functions, and applicable nomination frameworks governing their appointment. The sixth
section addresses sustainability policies applicable to SOEs.

1.1. Overview of the Philippines’ state-owned sector

This section provides an overview of the Philippine SOE sector, including the size and sectoral distribution,
as well as the governance framework for state-owned enterprises (SOEs) in the Philippines. It outlines the
institutional arrangements, legal foundations, and key actors involved in SOE oversight and ownership. It
also highlights the coordination mechanisms and challenges that define the current landscape.

1.1.1. Types of SOEs

In the Philippines, SOEs are referred to as Government-Owned or -Controlled Corporations (GOCCs).

They primarily provide essential public services to citizens as well as engage in commercial activities.
Entities qualify as GOCCs if the government holds at least 50% plus one of the outstanding shares. Under
Section 3(o) of Republic Act (R.A.) No. 10 149, also known as the "GOCC Governance Act of 2011, “any
corporation vested with functions relating to public needs, whether governmental or proprietary in nature,
and majority-owned by the Government of the Republic of the Philippines directly or through its
instrumentalities” is classified as a GOCC.
It is important to note, however, that the Philippine SOE landscape is diverse and the definition of GOCC
may not capture the full SOE landscape. Some may be categorised as statutory corporations or

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government agencies, particularly if their purpose is more aligned with public administration or regulatory
functions rather than commercial activities. While the majority of GOCCs are engaged in economic
activities and subject to the governance framework for SOEs, there are instances where the distinction
between SOEs, regulatory bodies and government agencies may require further clarification.
Additionally, the government holds minority shares in several entities. These entities, in which the
government holds less than 50% of the voting rights or equity, are not considered GOCCs under Philippine
law, and their classification may vary depending on the nature of their activities.
The Governance Commission for Government-Owned or -Controlled Corporations (GCG), the country’s
state ownership entity, recently proposed an amendment to standardise the definition of state-owned
enterprise (or GOCCs) across different laws and regulations. For instance, the definition for GOCC in the
Dividend Law (R.A. No. 7 656) may differ from that in the GOCC Governance Act or the individual charters
of GOCCs (GCG, 2024[1]).
GOCCs are created by law, charter or executive order, and may take various legal forms and can be either
wholly or majority state-owned. In general, SOEs that are incorporated as “stock corporations” are often
partially owned by private investors, with the state holding the majority of shares. SOEs that are “non-stock
corporations” are usually run for public service, social purposes or as regulatory bodies. Details on the
classifications of GOCCs, depending on how they are created, governed and regulated, are provided in
Box 1 below.

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Box 1. Classification of GOCCs in the Philippines

There are several ways to classify GOCCs, depending on how they are created, governed and
regulated.
Chartered GOCCs vs. Non-Chartered GOCCs
Chartered GOCCs 1 are established by specific legislation and have more autonomy, while Non-
Chartered GOCCs are governed by the revised Corporation Code of the Philippines, requiring them to
adhere more closely to the rules applicable to private corporations.
Chartered GOCCs: These are created and vested with functions by a special law or charter. Chartered
GOCCs are exempt from some of the requirements of the Corporation Code, such as holding annual
shareholders' meetings and maintaining minimum capital requirements. Any changes to their corporate
structure require amendments to their respective charters. Examples include the Social Security
System (SSS) and the Government Service Insurance System (GSIS). Chartered GOCCs are covered
by civil service regulations and other public sector laws.
Non-Chartered GOCCs: These are organised and operate under the now revised Corporation Code
of the Philippines (Republic Act No. 11 232), which applies to private corporations. Non-Chartered
GOCCs are treated similarly to private corporations in many respects, including compliance with
corporate laws like the requirement to hold annual shareholders' meetings. However, they are also
subject to other public sector laws.
Stock vs. Non-Stock Corporations
Stock corporations are designed to generate profits and distribute dividends, while non-stock
corporations typically focus on public welfare and reinvest their earnings into their operations. Both
stock and non-stock corporations may be either chartered or non-chartered GOCCs. All GOCCs,
whether stock or non-stock, are governed by public sector rules.
Stock Corporations: These are GOCCs that issue shares of stock and where ownership is determined
by the holding of capital stock. For a stock corporation to qualify as a GOCC, a majority of its shares
must be owned by the government. Stock GOCCs often engage in commercial activities, aiming for
profitability, and can operate similarly to private sector companies in terms of shareholding and
dividends.
Non-Stock Corporations: These are GOCCs without shares of stock. Instead of shareholders, these
entities often serve public interest goals and reinvest any surplus funds into their operations. Examples
include social welfare institutions like the Social Security System (SSS), which provides retirement
benefits to workers.
Both types of GOCCs can be classified as either Government Instrumentalities with Corporate Powers
(GICPs) or Government Corporate Entities (GCEs), depending on their legal framework and operational
scope.
Other GOCC Classifications
Statutory Corporations: These GOCCs are established through specific laws or statutes. Their
formation, objectives, and operational framework are defined by the law that created them. Many
GOCCs fall under this category, in which their operations are explicitly outlined in the legislation that
serves as their charter.
Quasi-Corporations: These entities are government instrumentalities with corporate powers. They
engage in economic activities but may not have the full legal identity of a corporation as they are not

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divided into shares as in the case of stock corporations. They operate under public law through a board
of directors and can enter into contracts, own assets, and conduct business, often providing public
services. They can generate revenues, retain its budget for itself and use it for their own purpose as
determined based on their charters.
Public Enterprises Created by Executive Orders: The President can order the creation of GOCCs
via executive order, typically to fulfil urgent or strategic functions. These can be designed for specific
purposes, like development projects or handling particular industries.
Under Section 3(o) of R.A. No. 10 149 (GCG Charter), GOCCs include Government
Instrumentalities with Corporate Powers (GICPs), Government Corporate Entities (GCEs), and
Government Financial Institutions (GFIs).
GICPs and GCEs refer to instrumentalities or agencies of the government, which are neither
corporations nor agencies integrated within the departmental framework but vested by law with special
functions or jurisdiction. They are endowed with some, if not all, corporate powers, administering special
funds and enjoying operational autonomy usually through a charter. They function with certain
autonomy and can have contracts, acquire assets, and conduct economic activities in a similar way to
corporations.
Government Financial Institutions (GFIs): GFIs are financial institutions or corporations in which the
government directly or indirectly owns majority of the capital stock, and which are either: 1) registered
with or directly supervised by the Bangko Sentral ng Pilipinas (BSP); or 2) collecting or transacting
funds or contributions from the public and places them in financial instruments or assets. These
institutions provide financial services, typically focusing on public interest sectors such as agriculture,
small businesses, or housing. Apart from the LBP and DBP, other examples include the SSS and the
GSIS - which manage social welfare funds and provide insurance services to government workers.
Source: OECD Secretariat’s elaboration based on questionnaire responses received from the Philippines (2024).

1.1.2. Size and sectoral distribution

GOCCs are present in key sectors of the economy such as finance, oil and gas, manufacturing,
telecommunications, electricity, transportation, utilities (including postal services), real estate, among
others (GCG, 2024[1]). There are currently 53 majority-owned unlisted enterprises comprising of 3 857
employees, and 66 statutory and quasi-corporations comprising of 120 966 employees at the central level.
GOCCs account for 0.25% of the total formal employment, representing a sizeably lower share than the
OECD 2% average.

Table 1. Aggregate data on GOCCs in the Philippines, end-2023

Majority-Owned Unlisted Enterprises Statutory Corporations and Quasi-Corporations
Number of Number of Value of Enterprises (in USD Number of Number of Value of Enterprises (in USD
Enterprises Employees mn)2 Enterprises Employees mn)
Primary 9 569 1 425 6 2 110 234
Sectors
Manufacturing 2 - - N/A N/A N/A
Finance 10 1 707 321 16 47 491 -135 095
Telecoms N/A N/A N/A 1 668 45.19
Electricity and 2 34 13 5 3 400 3 278
Gas
Transportation 1 486 - 10 22 943 7 884

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Majority-Owned Unlisted Enterprises Statutory Corporations and Quasi-Corporations

Number of Number of Value of Enterprises (in USD Number of Number of Value of Enterprises (in USD
Enterprises Employees mn)2 Enterprises Employees mn)
Other Utilities 1 62 647 4 23 087 5 673
(including
postal
services)
Real Estate 8 928 178 8 4 298 8 742
Other 20 71 10 16 16 969 -858
Activities
Total 53 3 857 2 594 66 120 966 -110 096
SOE employment as a share of total employment 0.25%3
Note: * Primary sectors include production and refining hydrocarbons. The figures presented for the Value of Enterprises refer to the total equity
of the GOCCs as of 31 December 2023. Missing values were not reported by the GCG.
Source: Information self-reported based on questionnaire responses submitted to the OECD by GCG (2024).

In recent years, the number of GOCCs in the Philippines has declined. When the Governance Commission
for Government-Owned or -Controlled Corporations (GCG), the country’s state ownership entity, was
established in 2011, there were 158 GOCCs. Over the past decade, the number has gradually declined,
and as of 2024, it stands at 119 with total assets amounting to PHP 11.6 trillion (~USD 230 billion). This is
primarily due to an ongoing privatisation policy (OECD, 2024[3]) motivated by the financial losses incurred
by certain GOCCs, the abolition of others that operate in sectors better suited for the private sector and
mergers that have taken place among SOEs (GCG, 2024[1]).
The size of the portfolio will decrease to 117 following the foreseen privatisation of two GOCCs (GCG,
2024[1]), while only three new GOCCs have been established in the past decade.4 The five largest GOCCs
operate in the financial sector and function as statutory quasi-corporations (Table 2). Thus, these SOEs
operate based on a different legal and regulatory framework from the rest of the portfolio due to the nature
of their public policy activities (GCG, 2024[1]).
As of March 2025, there were no listed GOCCs in the Philippines, although some GOCCs do have the
potential to become listed. Among existing GOCCs, according to the OECD Capital Market Review of the
Philippines (2024) two banks stand out, in terms of their total assets, net worth and income, as potential
candidates for listing of minority stakes on the stock market. Those include Land Bank of Philippines (LBP)
and Development Bank of the Philippines (DBP) (OECD, 2024[4]).
It is important to note that listing GOCCs may require a legislative amendment, and should be preceded
by government reforms focused on improving performance, governance and management of SOEs to
strengthen and sustain their commercial viability and competitiveness, in alignment with the SOE
Guidelines (OECD, 2024[4]). According to the information provided by the GCG, there are ongoing
discussions on the possibility to list some GOCCs (GCG, 2024[1]).

Table 2. Data on the five largest GOCCs in the Philippines, end-2023

Name Corporate Form Size of Enterprise (in USD mn)
Land Bank of the Philippines Statutory Corporations and Quasi- Asset Value 58 847
Corporations Book Equity 4 800
Market Capitalisation N/A
Annual Turnover 725
Number of Employees 12 601
Government Service Insurance System Statutory Corporations and Quasi- Asset Value 30 566
Corporations Book Equity -7 547
Market Capitalisation N/A
Annual Turnover 2 352
Number of Employees 3 511

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Name Corporate Form Size of Enterprise (in USD mn)

Development Bank of the Philippines Statutory Corporations and Quasi- Asset Value 17 705
Corporations Book Equity 1 524
Market Capitalisation N/A
Annual Turnover 107
Number of Employees 3 191
Home Development Mutual Fund Statutory Corporations and Quasi- Asset Value 16 657
Corporations Book Equity 12 197
Market Capitalisation N/A
Annual Turnover 896
Number of Employees 9 193
Social Security System Statutory Corporations and Quasi- Asset Value 15 993
Corporations Book Equity -141 137
Market Capitalisation N/A
Annual Turnover -7 992
Number of Employees 7 426

Source: Information self-reported based on questionnaire responses submitted to the OECD by GCG (2024).

Among the five largest GOCCs, LBP and DBP are covered under Section 4 of the Implementing Rules and
Regulations of the Dividend Law (R.A. No. 7 656) which mandates that GOCCs remit at least 50% of their
annual net earnings as dividends to the National Treasury. The other three GOCCs are exempt because
these “GOCCs are created or organised by law to administer real or personal properties held in trust for
the use and the benefit of its members” (GCG, 2024[1]).
While this exemption is based on the legal nature and mandate of these GOCCs, some of them may also
benefit from special budgetary allocations to support the fulfilment of their public policy objectives,
particularly those involved in social services and infrastructure.5 For example, the Social Security System
(SSS) receives subsidies from the government to provide social security protection to all workers (GCG,
2024[1]). However, it is important to note that the exemption from the dividend requirement is not directly
tied to the receipt of such allocations. The dividend exemption reflects the specific nature of these GOCCs'
functions, while the special budgetary allocations are provided separately based on government priorities
and fiscal strategies.

1.1.3. Role of the GCG and other institutional actors

The GCG, established under the 2011 GOCC Governance Act, serves as the central advisory, monitoring
and oversight body, with authority to formulate, implement and co-ordinate policies over the SOE sector.
According to this Act, any government agency wishing to establish a GOCC under the revised Corporation
Code of the Philippines must submit its proposal to the GCG for review. Once the GCG completes its
review, it submits its recommendation to the President for approval. Following the approval, necessary
registration with the Securities and Exchange Commission (SEC) could take place (GCG, 2024[1]). It is
important to note that Article 12, Section 16 of the 1987 Philippine Constitution highlights that "GOCCs
may be created or established by specific charters in the interest of the common good and subject to the
test of economic viability.” Economic viability extends beyond financial viability, encompassing the ability
to generate profit as well as non-material benefits (GCG, 2024[1]).
The GCG is composed of five members: the Chairperson who holds the rank of Cabinet Secretary, two
Commissioners (all appointed by the President of the Philippines), who are responsible for the leadership
and management of the GCG, and two ex officio members, the Secretary of Finance and the Secretary of
Budget and Management who, due to their roles in fiscal policy and budgeting, provide insight and
alignment with the government’s financial management strategies.

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The GCG fulfils non-trivial ownership functions for GOCCs, in coordination with line departments (line
ministries), the DOF and the DBM. The GCG’s ownership functions include nominating and selecting
directors or trustees, ensuring high governance standards for GOCC boards, and promoting transparency
and accountability by monitoring and evaluating GOCC performance. It also oversees mergers and
acquisitions involving GOCCs, provides recommendations on GOCC privatisation or closure, and sets
board and management remuneration schemes (GCG, 2022, p. 3[5]).
The 2011 GOCC Governance Act mandates that some of the GCG’s more critical powers be exercised in
consultation with the department (line ministry) to which an SOE is attached. While the state’s ownership
function is largely exercised by the GCG, as mentioned above, it is also shared by the DOF and the DBM,
though in a limited capacity. The Act states that the Secretaries of the DOF and the DBM, who are ex
officio members of the GCG, share the ownership function that the GCG has over GOCCs. This serves as
a built-in coordination system.
The DOF plays a critical role in overseeing GOCCs, ensuring that their operations align with national
development objectives, financial sustainability and fiscal prudence, as mandated under E.O. No. 127-A.
The DOF employs various policy instruments and legal frameworks to enhance accountability and
transparency. It monitors GOCC finances, evaluates borrowing programmes and oversees obligations
backed by government guarantees. Through its collaboration with key agencies, including the Bureau of
Treasury (BTR), the DBM and the GCG, the DOF ensures strategic oversight of GOCC operations (DOF,
2024[6]).
A key DOF responsibility is regulating the Dividend Law (R.A. No. 7 656), requiring GOCCs to remit at
least 50% of net earnings to the national government. In cases where a wholly owned GOCC pays
dividends in stock, it must follow guidelines set by the law and ensure that such dividends do not
compromise its financial stability or violate the terms of any outstanding obligations. It assesses
compliance, reviews adjustments and coordinates with the GCG for any exemptions beyond the prescribed
threshold.
Additionally, the DOF evaluates major GOCC projects for approval by the National Economic and
Development Authority (NEDA) Board and Investment Coordination Committee, ensuring alignment with
fiscal policies and economic priorities. It also reviews subsidy, guarantee and net lending requests to
maintain fiscal discipline. As an ex officio member of GOCC boards and the GCG, the DOF actively
participates in performance assessments, scorecard evaluations and determining board compensation
scales. The mandatory submission of financial reporting by GOCCs allows the DOF to make informed
oversight decisions (DOF, 2024[6]).
While the DOF focuses on fiscal oversight and strategic direction, the DBM manages budget allocations.
The DBM prepares the National Expenditure Budget Programme – the Executive’s proposed national
budget – which includes budgetary support to government corporations (GCG, 2024[1]). It issues budget
guidelines to assist government agencies, including GOCCs, in preparing proposals and evaluates these
submissions in line with the General Appropriations Act (DBM, 2024[7]). Capital injections for financially
troubled GOCCs follow the same approval process.
Following the evaluation of budget proposals coming from GOCCs, the DBM submits its list of
recommended budget allocations to the legislature for approval. However, in line with its primary mandate
of national budget management, the DBM focuses on chartered GOCCs and does not evaluate those
governed by the Corporation Code or the Securities and Exchange Commission (DBM, 2024[7]).
Given the multi-agency involvement in GOCC governance, financial oversight is a shared responsibility
among the DOF, the DBM, and the GCG. The details regarding the mandates of the above-mentioned and
other key institutional actors involved the ownership, oversight, coordination and regulation of GOCCs are
provided in Table 3 below.

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1.1.4. Special status of GOCCs

State ownership grants GOCCs certain rights and privileges distinct from other companies. For instance,
while GOCCs and government financial institutions (except banks) are generally covered by the Financial
Rehabilitation and Insolvency Act of 2010 (RA No. 10 142 Section 5), specific GOCC charters may provide
exceptions. Additionally, although GOCCs typically do not receive explicit government guarantees, the
authority of the national government to extend such guarantees is supported by the specific charters of the
GOCCs.
In case of foreign loans, R.A. No. 4 860, or the Foreign Borrowings Act, authorises the President to
guarantee, upon agreed terms and conditions, foreign loans extended to GOCCs (DOF, 2024[6]). 6
Furthermore, DOF Department Circular No. 001-2016 provides the guidelines and procedures for the
extension of guarantees by the government for the borrowings of GOCCs and government financial
institutions (GFIs). Meanwhile, certain GOCCs, such as the Tourism Promotions Board, National Tobacco
Administration and PhilHealth, benefit from specific budget allocations due to the nature of their activities.
When it comes to employee rights and privileges, there are several key points to consider. Tenure and job
security for GOCC employees are protected by both special and general laws. Employees of chartered
GOCCs have civil servant status. Their tenure and job security are governed by special laws and civil
service rules. In contrast, employees of non-chartered GOCCs are covered by general laws and subject
to the rules of the Philippine Labor Code (GCG, 2024[1]).

1.1.5. Special status regarding remuneration and compensation scheme for GOCCs

All GOCC employees are governed by the Compensation and Position Classification System (CPCS),
regulated by Executive Order (E.O.) No. 150 (s.2021) and R.A. No. 10 149. The GCG developed the CPCS
to establish a compensation and remuneration system for officers and employees of GOCCs and makes
recommendations to the President. Both chartered and non-chartered GOCCs receive the same
allowances, benefits and incentives under this system. Employees of chartered GOCCs are covered by
the Government Service Insurance System (GSIS), while non-chartered GOCCs may choose between the
GSIS and the SSS.
The CPCS undergoes periodic reviews per Section 9 of E.O. No. 150, considering GOCC performance,
contributions to the national economy, inflation and other factors. A recent market analysis carried out by
a CPCS consultant concluded that the total guaranteed and cash compensation for some GOCC
employees lags behind their counterparts in the private sector. The GCG is committed to incorporating the
market analysis results in the next version of the CPCS (GCG, 2024[1]) - although at the time of writing a
timeline for the CPCS revision was not provided.
Additionally, E.O. No. 24 (s. 2011) and R.A. No. 10 149 mandate a standardised compensation structure
for the boards of directors of GOCCs, promoting transparency, accountability and prudent government
spending. This structure aims to prevent abuses in compensation, per diems, allowances, bonuses and
other benefits. To determine the maximum allowable compensation for board members, pursuant to E.O.
No. 24, GOCCs are classified by size based on assets and revenues. Changes in classification are
reviewed by the GCG for Presidential approval. The GCG and its board, which includes members from the
DOF and the DBM, actively reviews appropriate board compensation that aligns with public service scales
(DOF, 2024[6]).

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Table 3. Key institutions involved in the ownership, oversight or regulation of SOEs in the
Philippines
Institution Description
Governance The GCG exercises state ownership functions and oversight of GOCCs. As the central advisory, monitoring and oversight
Commission for body, the GCG formulates, implements and coordinates policies for GOCCs in line with RA No. 10 149. Government
GOCCs (GCG) agencies must submit proposals for new GOCCs to the GCG for review before seeking Presidential approval and
registration with the Securities and Exchange Commission. The GCG has ownership responsibilities, including
nominating directors, enforcing governance standards, monitoring GOCC performance, managing mergers,
recommending privatisation or abolition and establishing competitive remuneration schemes. However, it exercises
ownership rights in coordination with the DBM and DOF, as well as relevant line ministries.
Department of Budget The DBM evaluates GOCC budget proposals in line with the Appropriation Act, and capital injections for struggling
and Management GOCCs follow the same approval process. After evaluation, the DBM submits its list to the legislature. The DBM also
(DBM) prepares the National Expenditure Program, which includes budgetary support to eligible government corporations.
Department of Finance The DOF monitors the financial performance of GOCCs, particularly in managing their liabilities, and oversees the
(DOF) evaluation and approval of borrowing programmes and investment or financing plans. It implements the Dividend Law
(R.A. No. 7 656) and collects dividends from GOCCs. Any remittance adjustments over 50% decided upon consultation
with the GCG, highlighting both institutions’ financial oversight roles. Section 5 and Section 7 of the Dividend Law state
that the percentage of annual net earnings that shall be declared by a GOCC may be adjusted by the President of the
Philippines upon recommendation by the Secretary of Finance.
National Economic and The NEDA plays a strategic role in overseeing the economic planning and policy making process in the Philippines,
Development Authority including SOEs. It ensures that SOEs align with the country's long-term development goals and evaluates their
(NEDA) performance through a governance lens that promotes efficiency, transparency and accountability in line with national
economic priorities.
Securities and The SEC regulates the corporate sector, including SOEs that are publicly listed or whose securities are publicly traded.
Exchange Commission It sets standards for corporate governance, transparency and investor protection. By enforcing compliance with
(SEC) governance codes and financial disclosure regulations, the SEC promotes accountability and integrity in the operations
of SOEs. While adherence to the code is generally recommended, it is mandatory for publicly listed SOEs, ensuring they
meet required standards of governance and disclosure.
Philippine Competition The PCC ensures fair market competition by monitoring and regulating business practices, including those of SOEs. It
Commission (PCC) enforces competition law to prevent monopolistic behaviours, abuse of market dominance and anti-competitive practices,
ensuring that state-owned enterprises operate within a fair and competitive market framework.
Commission on Audit The COA is the supreme audit institution responsible for auditing and reviewing the financial transactions and
(COA) performance of SOEs. It promotes good governance by ensuring that public funds are used efficiently, effectively and
transparently, helping to prevent corruption and financial mismanagement in state-owned enterprises.

Source: Information self-reported based on questionnaire responses submitted to the OECD by GCG (2024).

1.1.6. GOCC’s relations with the government

Government intervention in the day-to-day management of GOCCs can be an unintended consequence

of state ownership. To mitigate this, best practices as outlined in the SOE Guidelines recommend that
states avoid ad hoc interventions and encourage boards to maintain their independence from undue
influence (OECD, 2024[2]).
The Philippines defines undue influence or political interference as the improper use of one’s own power
or position to influence board members, particularly in the case of GOCCs, depriving them of their free
choice. This influence undermines the board members’ independent decision-making and causes them to
act according to the will of those exerting the influence (GCG, 2024[1]). To prevent such occurrences, Article
9 of GCG M.C. No. 2012-06 emphasises that "the National Government shall not be involved in the day-
to-day management of GOCCs, and the boards shall be granted full operational autonomy to achieve the
defined objectives of the GOCCs" (GGC, 2012, p. 12[8]).
Furthermore, Article 10 of GCG M.C. No. 2012-06 states that GOCCs should be granted appropriate
flexibility to operate effectively in a competitive market environment, while still adhering to the principles of
public accountability. In addition, the Administrative Code of 1987 also provides that GOCCs maintain
operational autonomy from the supervising agencies to which they are linked, and matters related to the
daily or internal operations of the GOCCs shall be left to the discretion of their boards (GCG, 2024[1]).

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The GOCC Governance Act of 2011 (R.A. No.10 149) emphasises that the board members are “agents of
the state” and are therefore legally obligated to act in the best interest of the GOCCs. This is further
reinforced by Section 5 of GCG M.C. 2012-07, which highlights that the governing board’s primary
responsibility is the governance of GOCCs, making them accountable to the state for the performance and
operations of the GOCCs (GCG, 2024[1]). However, it is important to note that GOCC charters may also
specify that officials from other agencies serve as ex officio board members to support policy and
programme coordination, and ensures that the corporate plans and programmes proposed by the
governing bodies align with the sectoral priorities and objectives of the supervising agencies, such as the
DBM and the DOF (GCG, 2024[1]). The issue of board independence is further explored in the section on
the role and responsibilities of the board.

1.2. SOEs in the marketplace

When SOEs engage in economic activities, the SOE Guidelines emphasise that the legal, regulatory and
policy framework for SOEs should maintain a level playing field and make sure that conditions are present
for fair competition in the marketplace. This includes separating the state's ownership role from its
regulatory and policy-making functions to prevent any potential conflicts of interest in the state’s different
roles and functions. SOEs should operate under market-based conditions for financing and be subject to
insolvency proceedings and creditor claims. Transparency is required in areas where SOEs provide public
service obligations, and SOEs should not be used to subsidise or provide advantages to other commercial
entities.
Furthermore, the OECD Recommendation on Competitive Neutrality outlines principles to make sure that
government actions are competitively neutral, allowing all enterprises compete on a level playing field. The
Recommendation underlines that competitive neutrality means providing equal treatment to all market
participants, ensuring that no enterprise receives undue advantages or disadvantages over other
enterprises (OECD, 2024[9]). To aid in the implementation of these principles, the OECD Competitive
Neutrality Toolkit offers a set of best practices based on international examples to help officials identify
and mitigate competition distortions caused by state intervention (See Box 2).
This section examines how GOCCs operate within the Philippine marketplace, focusing on the principles
of competitive neutrality and fair competition. It outlines the legal and regulatory frameworks designed to
ensure a level playing field between GOCCs and private entities - including access to finance, tax
treatment, the role of the competition authority, and public procurement - and also discusses relevant
challenges.

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Box 2. Key elements of the OECD Competitive Neutrality Toolkit (2024)

Selected good practices from each of the areas covered by the Toolkit:
The regulatory environment should be competitively neutral and should be enforced with equal
rigour, appropriate deadlines and equivalent transparency with regard to all current or potential
market participants. All market players, both current and potential, should receive uniform treatment
not only in terms of the legal framework, but also in its enforcement. This includes a legal framework
on competitively neutral competition, so that competition rules are applied to all market participants in
the same manner.
Exempting certain players from regulations may be necessary to achieve policy objectives that could
not be accomplished through other means. Any exemptions from regulations should be
transparent, justified by clear policy objectives and narrowly applied. When exemptions are
adopted in a transparent way and are publicly known, this can allow for open discussion on the merits
of the exception and for objections and alternative proposals to be put forward and considered.
Moreover, good practices highlight that exceptions that have been adopted in order to achieve a specific
public objective do not go beyond what is strictly necessary to achieve that objective, so that distortions
to competition are limited to the extent possible.
Public-procurement rules should treat all potential bidders in a similar way, without
discrimination and irrespective of ownership, legal form, nationality, and origin of goods.
Government procurement processes should follow open, fair, non-discriminatory and transparent
conditions, so that all potential suppliers can take part in public tenders, and all bidders (including SOEs,
incumbents, domestic companies or firms providing goods that are produced largely domestically) are
treated in an equitable manner.
State support measures should identify and disclose the specific public policy objective to
address as well as the extent to which the measures are likely to address it. Authorities are
expected to clarify how state support contributes to achieving the policy objective and to what extent it
addresses it.
State support measures, such as loans, guarantees and capital injections/investments, should
be assessed to identify if they are granted in line with market principles. Jurisdictions are expected
to evaluate if an enterprise receives a benefit, i.e. better conditions than those available in a market
transaction. If this is the case, the next step would be to analyse if this is a selective benefit and to
examine the distortions of competition the measure creates.
Any public service obligation placed upon an enterprise should be identified in a transparent
and specific manner. A clear definition of the services within the scope for the public service obligation
helps potential providers assess the business case and, if applicable, submit a bid to supply the
services. In turn, meaningful bids contribute to selecting the best placed public service provider and
keeping the necessary compensation to a minimum.
Decisions regarding the compensation for public service obligations are also a crucial aspect to consider
in order to maintain a level playing field. When a public service obligation is placed upon an enterprise,
measures should be in place in order to prevent both over-compensation and under-compensation, and
in order not to unduly advantage or harm a competitor.
Source: OECD (2024[9]), Competitive Neutrality Toolkit, https://www.oecd.org/en/publications/competitive-neutrality-toolkit_3247ba44-en.html.

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1.2.1. Legal and regulatory framework

The government has been working on enhancing the legal and regulatory framework to ensure a level
playing field between GOCCs and private companies. GOCCs and their board members are not immune
from lawsuits, meaning they can face legal claims from creditors and other stakeholders, just like private
companies. With the exception of real property tax exemptions for entities classified as Government
Instrumentalities with Corporate Powers (GICPs) or Government Corporate Entities (GCEs), GOCCs are
subject to the same taxation, competition, environmental and zoning regulations as private companies.
However, it is important to note that exemptions from taxes, duties, or other charges, as well as guarantees
on debt, are permitted “if justified by a greater public interest”, with each case evaluated individually by the
GCG (OECD, 2020[10]). Commercial laws in the Philippines generally apply to corporatised GOCCs, but
these institutions are also governed by specific laws or charters that may modify certain provisions
GOCCs are also subject to the Philippine Competition Act (PCA) of 2015, which applies to entities “owned
or controlled by the government, engaged directly or indirectly in any economic activity”, as stated in
Section 4(h). Thus, the Act is enforceable against any entity engaged in trade, industry or commerce,
including SOEs.
The GOCC Governance Act of 2011 further incorporates principles of competitive neutrality. Section 2(g)
of the Act mandates a "clear separation between the regulatory and proprietary activities of GOCCs, in
order to achieve a level playing field with corporations in the private sector performing similar commercial
activities." Section 6 requires the GCG to review the functions of each GOCC.
If the GCG identifies a conflict between a GOCC’s regulatory and commercial functions, it may recommend
to the President, in consultation with the relevant government agency, the privatisation of the GOCC’s
commercial operations, the transfer of regulatory functions to the appropriate government agency, or
another plan to ensure that the GOCC’s commercial functions do not conflict with its regulatory roles.
Despite it being the case, some GOCCs (as noted further below) may concurrently exercise both
commercial and regulatory functions.
The principle of competitive neutrality was further reiterated in the Ownership and Operations Manual
Governing the GOCC Sector (GCG M.C. No. 2012-06). Moreover, the promotion of competitive neutrality
is among the responsibilities of the GCG under the National Competition Policy of the Philippines (NEDA-
PCC J.M.C. No. 01-2020).
Although the government has made efforts to level the playing field between GOCCs and private
companies, an earlier OECD report had noted that challenges remain within the Philippines’ competition
framework. These challenges include long-standing government-owned monopolies, government-
authorised monopolies and government control over the entry and expansion of market players (OECD,
2021[11]).
In some instances, the government grants certain entities the legal authority to operate as a monopoly
through an administrative or legislative franchise. Such practices are most prevalent in sectors like
electricity transmission, water distribution systems, and build-and-operate arrangements for transport
facilities, including road services, railways, and air and sea transport.
In addition to these broader challenges, specific cases in the Philippines illustrate persistent tensions
between the regulatory and commercial functions of some SOEs. Notably, entities such as the Philippine
Amusement and Gaming Corporation (PAGCOR), the Philippine Ports Authority (PPA), the Civil Aviation
Authority of the Philippines (CAAP), and the Laguna Lake Development Authority (LLDA) continue to
perform dual roles - engaging in both commercial operations and regulatory oversight. These overlapping
functions have raised concerns about conflicts of interest and competitive neutrality, and have been the
subject of congressional inquiries, including in the lottery and gaming sectors.

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Similar issues arise in the case of the Local Water Utilities Administration (LWUA), which serves as both
financier and quasi-regulator for local water districts – some of which it also has equity stakes in – raising
concerns about preferential treatment unavailable to private players. Such overlapping mandates
underscore the continued need for careful functional reviews of each GOCCs operations to ensure
competitive neutrality and avoid market distortions.

1.2.2. Access to financing and other state support

GOCCs can benefit from an advantage in securing both government and private financing, as the national
government often acts as the guarantor of their loans (U.S. Department of State, 2023[12]). In addition,
GOCCs may receive preferential treatment through government subsidies. With approval from the DBM,
the government can guarantee the financial instruments of GOCCs.
Notably, some of the largest GOCCs in the Philippines, including the Government Service Insurance
System, the Home Development Mutual Fund, the Philippine Health Insurance Corporation (PhilHealth)
and the Social Security System (SSS), are not covered by the Dividend Law (R.A. No. 7 656), which
mandates that GOCCs remit at least 50% of their annual net earnings to the National Treasury. The
rationale how these four GOCCs are treated is that these “GOCCs are created or organised by law to
administer real or personal properties held in trust for the use and the benefit of its members” (GCG,
2024[1]).
Some of them also benefit from special budgetary allocations to support their public policy objectives. For
example, PhilHealth and the SSS receive subsidies to help support insurance payments for the
unemployed with disabilities and to fund the Education Assistance Loan Programme, which has been
supported by government funding since 2012 (GCG, 2024[1]). Unlike private companies, GOCCs can also
request “exclusive” subsidies from the DBM, allowing them to expand their networks or lines of businesses
- benefits that are not available to private companies (OECD, 2020[10]).

1.2.3. Tax treatment

While GOCCs are in principle subject to the same enforcement of tax obligations as private companies
under the Administrative Code of 1987, certain instances allow for tax privileges to be granted to GOCCs.
Section 10 of the GOCC Governance Act of 2011 states that a GOCC shall be granted no incentives unless
it has paid all taxes and dividends for which it is liable. Despite this, some GOCCs may enjoy privileges,
such as the Philippine Amusement and Gaming Corporation, whose charter requires it to pay a 5%
franchise tax in lieu of all taxes on its income from gaming operations. As such, laws creating GOCCs or
their charters may allow them specific advantages.

1.2.4. Role of the competition authority

In 2016, the Philippine Competition Commission (PCC) was established to implement the national
competition policy. According to the PCA, the PCC is composed of a Chairperson and four Commissioners,
who must not have been candidates for any elective national or local office in the elections immediately
preceding their nomination. The PCC is also tasked with formulating a National Competition Policy (NCP)
to guide government regulations and administrative processes in fostering competition, enhancing the
enforcement of antitrust and competition laws, and ensuring the consistent application of competitive
neutrality.
The PCC coordinates with other agencies such as the NEDA, the Department of Trade and Industry, the
Department of Justice, and the GCG. Furthermore, the PCC provides expertise on competition in
legislative deliberations and submits position papers and recommendations on competition-related

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legislation. The PCC's Enforcement Office has the authority to investigate anti-competitive behaviours by
SOEs (OECD, 2020[10]).
In 2020, the PCC, together with the NEDA, issued Joint Memorandum Circular No. 01-2020 (J.M.C.), as
affirmed by Administrative Order (A.O.) No. 44, s. 2021.7 The J.M.C. provides guidelines for the adoption
and implementation of the NCP. The J.M.C. outlines guidelines for: 1) pro-competitive policies and
government interventions; 2) competitive neutrality; and 3) the enforcement of competition-related laws
and issuances.
The government issued an updated Philippine Development Plan 2023-2028, which addresses key
economic challenges and growth priorities. The overarching goals of the Plan are to promote job creation
and reduce poverty by transforming the economy and public services. Chapter 10 focuses on enhancing
competition and improving regulatory authority, emphasising the full implementation of the PCA. It also
commits to enforcing the separation of regulatory and economic activities of GOCCs and ensuring that
they are subject to the same regulatory framework as private companies.
The Plan further outlines that the GCG, along with other GOCC oversight agencies, should collaborate
with the PCC and government bodies that have legislative provisions for both regulatory and ownership
roles. This collaboration aims to review their mandates and ensure that structural measures are in place
to minimise potential conflicts of interest in the exercise of their regulatory functions. Notably, the PCC and
the GCG signed an agreement in 2022 to formalise their coordination efforts in reviewing regulations and
guidelines to foster competitive neutrality and enhance compliance with competition laws.8
The PCC has the authority and power to investigate and penalise anti-competitive behaviour by GOCCs
under PCA sections 14 and 15 of the PCA. It can initiate investigations by itself or in response to complaints
from other government agencies or stakeholders overseeing GOCCs. However, there have been no
instances of GOCCs being investigated or penalised. While this does not necessarily indicate a lack of
enforcement power, it suggests that effective implementation of pro-competition policies and anti-trust laws
is limited and requires greater inter-agency collaboration (PCC, 2024[13]; GCG, 2024[1]).

1.2.5. Public procurement

Upholding standards of good governance and integrity in public procurement contributes to effective and
efficient use of resources and fosters government accountability (OECD, 2015[14]). In 2024, the Philippines
revised the Government Procurement Reform Act, renaming it the New Government Procurement Reform
Act (R.A. No. 12 009). Section 3 emphasises transparency, competition, efficiency and accountability in
public procurement, ensuring value for money and public participation. Section 20 mandates all
government agencies, including GOCCs, to use the Philippine Government Electronic Procurement
System as the primary platform for procurement activities. This allows broader participation, including
private sector bids (Government of Philippines, 2024[15]).
To comply with A.O. No. 44, s. 2021 and NEDA-PCC J.M.C. No. 01-2020, GOCCs are encouraged to
adopt pro-competitive procurement guidelines. However, agency-to-agency procurement may be
permitted in cases where it is more efficient, fast, or cost-effective.
An OECD study (OECD, 2020[10]) also identified challenges in ensuring competitive neutrality during the
public procurement process. While public procurement rules in the country apply to all public entities, and
GOCCs fall under the jurisdiction of the Act, in practice, GOCCs still receive certain advantages during the
procurement process. They benefit from three main advantages:
1. GOCCs are not required to register with the Philippine Government Electronic Procurement
System, unlike private companies.
2. Under the flexibility provided by the Act, the government and a GOCC can have a straightforward
“agency-to-agency” contract, bypassing the usual requirements for a public tender.

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3. There is an effective, specialised mediation process under the Secretary of Justice for resolving
disputes between GOCCs, or between a GOCC and the government. The decisions made through
this process are final and binding, except in rare cases where they can be appealed to the
President. Additionally, the Department of Justice offers legal counsel to GOCCs.
In practice, these advantages can create an incentive for government agencies to source their services
from GOCCs due to the convenience of “agency-to-agency” contracts (OECD, 2020[10]). The Secretariat
has been informed that the PCC is in discussion with the GCG to develop a Bid-Rigging Screening Tool to
address loopholes in the public procurement process, which is an important step towards preventing undue
advantages for SOEs. The state could ensure that GOCCs are subject to the same procurement
procedures as private bidders in order to maintain a level playing field.

1.3. Equitable treatment of shareholders and other investors

Chapter IV of the SOE Guidelines underline the necessity to treat SOE shareholders and non-state
investors in an equitable manner with their rights recognised regardless of their shares and with equal
access to corporate information (OECD, 2024[2]). To that end, the Philippines has some provisions and
regulations in place.
In cases where the GOCCs have non-state shareholders, their rights are established by the law through
the GOCC charter. If the entity does not have a legislative charter and is registered with the SEC, the rights
are established by the revised Corporation Code (R.A. No. 11 232), particularly its articles of
incorporation/by-laws, as well as SEC-related regulatory and compliance requirements, including filing
obligations, governance rules and shareholder rights.
In addition, the establishment of shareholders’ rights in non-chartered GOCCs are regulated by the revised
Corporations Code of the Philippines, aligning them with the provisions of the GOCC Governance Act of
2011 (R.A. No. 10 149) (GCG, 2024[1]).
The Code of Corporate Governance for GOCCs contain provisions designed to safeguard the rights of
minority shareholders. For instance, Section 32 emphasises that the interests of minority shareholders
must be taken into account, even when the state is the controlling shareholder. In particular, GOCCs
regularly publish their key financial and non-financial information on their individual websites and are to be
made available to all shareholders.9
The Code further emphasises that the responsibilities of GOCCs should be recognised, and their duties
towards the government, “minority and majority stockholders” as well as their “employees, suppliers,
customers, and other stakeholders, including the communities” in which they operate, should be carried
out by the governing boards (GGC, 2012, p. 24[8]; GCG, 2024[1]).
Moreover, the Code requires that related-party transactions occur at arm’s length, which aims to prevent
conflicts of interest and protect minority shareholders from being disadvantaged in transactions involving
GOCCs. However, information on the extent to which the regulator and courts may enforce minority
shareholder protections was not assessed by the Secretariat.
The OECD Capital Markets Review of the Philippines highlighted areas for improvement in shareholder
governance and the protection of minority shareholders’ rights in listed companies compared to other
ASEAN (Association of Southeast Asian Nations) economies (OECD, 2024[4]). Effective implementation of
existing provisions, along with enhancing legislation and corporate governance standards, would
strengthen investor confidence and market integrity (OECD, 2024[4]).

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1.4. Disclosure and transparency requirements

The SOE Guidelines state that “state-owned enterprises should observe high standards of transparency,
accountability and integrity and be subject to the same high-quality accounting, disclosure, compliance
and auditing standards as listed companies” (OECD, 2024[2]). The information disclosed by the state as an
owner should be comprehensive, accurate and openly accessible (OECD, 2024[2]). The SOE Guidelines
also encourage the use of digital means to enhance disclosure and accountability in the SOE sector. This
section covers financial and non-financial disclosure requirements for SOEs, internal audit and control
mechanisms, external audit and control mechanisms, and aggregate reporting.

1.4.1. Financial and non-financial disclosure requirements SOEs

In the Philippines, the GCG sets the overall disclosure and reporting obligations for GOCCs. These
obligations include requirements for developing websites and publishing both financial and non-financial
information of SOEs for public access. The disclosure and access to information policy is embedded in
Section 28, Article II of the 1987 Constitution, which states: “Subject to reasonable conditions prescribed
by law, the state shall adopt and implement a policy of full public disclosure of all of its transactions involving
public interest.”10
The general obligation related to public disclosures by the GOCCs is outlined in the GOCC Governance
Act of 2011 (R.A. No. 10 149), with more detailed requirements specified in GCG Memorandum Circular
No. 2012-07, which lists the types of financial and non-financial information that GOCCs are required to
publish. This includes audited financial statements, the list of board members and directors, charter
statements, performance scorecards, and other reports (see Table 4).
Section 25 and Section 43 of GCG M.C. No. 2012-07 mandate GOCCs to publicly disclose a list of their
subsidiaries and affiliates, along with information on local and foreign borrowings, government subsidies,
net lending, and all borrowings under government guarantee. Some information related to liabilities may
also be stated in the Annual Audit Reports of the GOCCs conducted by the COA (GCG, 2024[1]).
In addition, the General Provisions of the Annual Appropriations Act requires all agencies of the
government and GOCCs to publish Transparency Seal information on their websites. This includes their
mandate and functions, budgets, annual procurement plans, major projects, main activities, and other
relevant details. Furthermore, E.O. No.2, s.2016, mandates all government offices under the executive
branch, which includes GOCCs, to publish “Freedom of Information” manuals on their websites (DOF,
2024[6]).
Based on the classification of GOCCs by the COA, GOCCs either follow the International Public Sector
Accounting Standards (IPSAS) or the Philippine Financial Reporting Systems (PFRS), which are based on
the main principles of the International Financial Reporting Standards (IFRS). GOCCs classified as
“Commercial Public Sector Entities” (CPSEs) follow the PFRS, while those classified as “Non-Commercial
Public Sector Entities” (Non-CPSEs) follow the IPSAS (GCG, 2024[1]).
While the use of dual accounting standards – IPSAS for Non-CPSEs and PFRS for CPSEs – may be
appropriate for the distinct nature of each entity, it can still create challenges in creating a fully unified
financial reporting system across all GOCCs. The rest of this section will provide details on disclosure of
board and executive remuneration, material risks, employee and stakeholder relations, public policy
objectives, and sustainability.

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Table 4. Information disclosure requirements for GOCCs

Institutional matters Board and executive Finance and operations Governance
management
• Charted GOCCs: • The full list of directors • Latest annual • Charter Statement and
latest version of and officers with their Audited Financial Mission-Vision
the charter. resumes, and their and Performance Statements.
• Non-charted membership in board report within 30 • Performance Scorecards
GOCCs: latest committees. days from receipt and Strategy Map.
General • The full compensation of such report. • Organisational Chart.
Information Sheet package of board • Audited financial • Manual of Corporate
(GIS), brief members and officers statements in the Governance.
company including travel expenses, past three years. • Corporate Social
background transportation and other • Quarterly and Responsibility Statement
including date of form of expenses or annual reports and (CSR).
incorporation, allowances. trial balance. • Balanced Scorecard, a
history, functions • Information on board • Local and foreign strategic management
and mandate. committees and their borrowings. tool used to measure
• List of subsidiaries activities. • Government and manage
and affiliates. • Attendance records of subsidies and net performance across key
• Government directors in board and lending. areas.
Corporate committee meetings. • All borrowings
Information Sheet guaranteed by the
(GCIS). government.
• Any material risk
factors and
measures taken to
manage such risks.
• Performance
Evaluation System.

Source: Section 35, Section 41, Section 43, GCG Memorandum Circular No. 2012-07.

Disclosure requirements for the remuneration scheme of the board and executive
management

Apart from Section 41 of GCG M.C. No. 2012-07, disclosure practices related to the remuneration policies
and levels of board members and key executives are further regulated by Section 43 of GCG M.C.
No. 2012-07, which is based on Section 25 of R.A. No. 10 149. Section 43 mandates that GOCCs publicly
disclose the remuneration packages of all board members and officers, including details of travel
expenses, transportation, and other expenses and/or allowances. In addition, the COA publishes an annual
“Report on Salaries and Allowances” for principal officers, board members, secretaries, undersecretaries,
assistant secretaries, and other officials with equivalent ranks in national government agencies and their
subsidiaries. This report is available on the COA’s website in an open-access format (GCG, 2024[1]).

Disclosure of material risks

In line with the guiding principles of the IPSAS and PFRS standards, all material risk factors as well as risk
management including for off-balance sheets, assets and liabilities are disclosed in the financial reports of
the GOCCs.11 Additionally, for off-balance sheet transactions, GOCCs are obliged to report to the GCG on
a regular basis.12

Disclosure requirements on employees and stakeholder relations

Section 35 of CG M.C. No. 2012-07 regulates disclosure requirements related to employees and
stakeholders. Sections 36 to 40 require formal recognition of GOCCs’ stakeholders, including their
employees, customers and suppliers, as well as matters related to their health, safety and the environment.

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These matters are included in the Corporate Governance Scorecards, which are publicly disclosed on the
GOCCs’ websites. Compliance with Section 35 of GCG M.C. No. 2012-07 is enforced through the
application of the Performance-Based Bonus (PBB) system for executive-level management, as well as
for employees, including mid-level managers and rank-and-file employees. However, more information is
needed on how compliance is ensured through the PBB system.
Additionally, maintaining an up-to-date Manual of Corporate Governance is among the requirements under
Section 43 of GCG M.C. No. 2012-07 – compliance to which is a good governance condition for any GOCC
before they can receive authorisation to be granted the performance-based bonus. The Manual, which
assesses compliance with the Code of Corporate Governance for GOCCs, is submitted to the GCG for
monitoring (GCG, 2024[1]).

Disclosure requirements on public policy objectives

Section 43 of M.C. No 2012-07 and Section 25 of R.A. No. 10 149 emphasises that GOCCs are required
to maintain a website where they upload the charter and information on the background of GOCCs,
including the mandate and functions of the corporations as well as purpose of creation (GCG, 2024[1]).
Chartered GOCCs typically have their public policy objectives embedded in their establishing laws or
charters and non-chartered GOCCs outline their primary and secondary purposes in their articles of
incorporation and by-laws, in accordance with the revised Corporation Code of the Philippines (DOF,
2024[6]).
While this framework ensures transparency regarding GOCC mandates and objectives, gaps remain
concerning SOE Guidelines V.E when public policy objectives are not explicitly stated in GOCC charters.
To enhance clarity and accountability, GOCCs could be expected to disclose their public policy objectives
and report on progress in fulling them.
The GOCC Governance Act of 201113 serves as the main legal document setting out the rationale and
framework for state ownership arrangements. The Act recognises that state ownership reflects
considerations of public interest and the common good, promoting economic development, and ensuring
economic viability. One of the primary objectives of state ownership is to ensure that GOCCs are governed
transparently and in an accountable manner, with their operations aligned with “national development
policies and programs” (GCG, 2024[1]). Both the Act and GCG Memorandum Circular (M.C.) No.2016-06
recognise GOCCs as “significant tools for economic development.”
The GOCC Governance Act of 2011 established mechanisms for oversight, such as performance
evaluation systems, and mandated adherence to the Code of Corporate Governance for GOCCs, which
outlines best practices for corporate governance, including board responsibilities and financial reporting.
The Code also highlights the importance of protecting the rights of minority shareholders, even when the
state is the controlling shareholder.
The Act further established the GCG of the Philippines to centralise and co-ordinate the state ownership
function, placing GOCCs under its mandate. The GCG is attached to the Office of the President and is
thus directly accountable to the President, while also reporting to the Congress, through various types of
reports, including annual reports and budget-related reports, as required by law. These reports provide
updates on the performance and financial status of GOCCs, as well as the GCG’s oversight activities.
The GCG exercises ownership functions in coordination with line ministries, the Department of Finance
(DOF), and the Department of Budget and Management (DBM). While the GCG was created as the main
“advisory, oversight and monitoring body” (GCG, 2012[16]), the DOF is responsible for the formulation,
institutionalisation, and administration of fiscal policies in coordination with other government agencies and
GOCCs, as outlined in E.O. No. 292 (s. 1987), also known as the Administrative Code of 1987. In addition,
the DOF monitors the operations of GOCCs to ensure that government assets and resources are used
efficiently (DOF, 2024[6]).

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To achieve the state’s objectives, the GCG ensures the appropriate use of corporate forms, including the
closure or privatisation of GOCCs that engage in activities better handled by the private sector.
Government agencies are also enjoined to exercise restraint in creating or acquiring corporations under
Article 13 of GCG M.C. No. 2012-06 (OECD, 2024[3]). Notably, while a Supreme Court decision has
affirmed that the GCG has the authority to reorganise GOCCs without congressional approval (see Bataoil
v. GCG, G.R. No. 212 789, March 8, 2017), changes to the governance structures – such as board
composition – still require congressional action, which may limit the GCG’s ability to implement certain
reforms.
In compliance with the GOCC Governance Act of 2011, the GCG issued the “Ownership and Operations
Manual Governing the GOCC Sector” (GCG M.C. No. 2012-06) in 2012.14 The Ownership Manual outlines
specific rules and guidelines for the exercise of state ownership and provides a framework for the
management, oversight, and governance of GOCCs. It is publicly accessible via the GCG’s website.
The manual is developed in consultation with relevant government agencies and institutional stakeholders.
The OECD Secretariat has been informed that the Philippines is also in the process of updating the Code
of Corporate Governance for GOCCs. Despite being in place since 2012, the Ownership and Operations
Manual has not been revised, which may also need updating to reflect evolving governance arrangements
and state ownership practices in the SOE sector (GCG, 2024[1]).

Sustainability-related disclosures

Currently, there are no sustainability-related disclosure expectations for GOCCs. However, the GCG is in
the process of amending the Code of Corporate Governance for GOCCs. The draft amendment will include
expectations for the disclosure of “material and reportable non-financial and sustainability issues,” with a
particular focus on the management of economic, environmental, social and governance (EESG) issues
stemming from GOCCs’ business and operations.
In addition, the draft amendment requires that an annual sustainability report, covering policies, practices
and performance related to EESG factors, as well as risks arising from digitalisation, artificial intelligence,
cybersecurity, and nature, be submitted by GOCCs to the GCG and published on their websites (GCG,
2024[1]). While detailed information about the proposed amendment is not yet available to the OECD
Secretariat, this can be seen as a positive development.

1.4.2. Audit Committee, internal audit and internal controls mechanisms

The Code of Corporate Governance for GOCCs underline the responsibility of boards and the Audit
Committee. Based on the Code, the boards have the ultimate responsibility “to ensure the integrity of the
GOCCs’ accounting and financial reporting systems, which includes risk management, financial and
operational control, and compliance with laws and relevant standards.”
As required by the Code of Corporate Governance for GOCCs, the Audit Committee has the authority to
“oversee, monitor and evaluate the adequacy and effectiveness of the GOCCs’ internal control systems”.
Importantly, the internal audit function reports directly to the Audit Committee. Section 7 of the R.A. No.
6 713 15 underlines prohibited acts and transactions in addition to the acts outlined for any officials or
employees in the constitution as well as in the existing laws.
For appointed directors of the governing boards, GCG M.C. No. 2012-0516 states that if board members
are convicted of violating the acts listed under Section 7 of the R.A. No. 6 713, it shall constitute a cause
for dismissal from the board positions. GOCCs have the mandate to establish their own Internal Audit
Service (IAS) and Internal Audit Unit (IAU).17 The specific functions of the IAS/IAU are described in Box 3.

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Box 3. Functions of Internal Audit Service (IAS) and Internal Audit Unit (IAU)
a) Advise the Governing Board18 through the Audit Committee in the case of GOCCs/GFIs on all
matters relating to management control and operations audits.
b) Conduct management and operations performance audit of GOCC/GFI activities and their units
and determine the degree of compliance with their mandate, policies, government regulations,
established objectives, systems and procedures/processes and contractual obligations.
c) Review and appraise systems and procedures, organizational structures, asset management
practices, financial and management records, reports and performance standards of the
agencies/units covered.
d) Analyse and evaluate management deficiencies and assist the top management by
recommending realistic courses of action.
e) Perform such other related duties and responsibilities as may be assigned or delegated by the
Governing Board or as may be required by law (Philippines Department of Budget and
Management, 2008, p. 2[17]).
Source: Governance Commission for Government-Owned or -Controlled Corporations of the Philippines (GCG)

These bodies report to the Audit Committee of the GOCCs’ board of directors 19 in line with the
requirements established by the Code of Corporate Governance for GOCCs. 20 The Committee is
composed of at least three directors, and the chairperson should have an audit, accounting or finance
background.21 As described further below, there are no formal requirements in GOCCs to have a minimum
number of independent directors on boards, including for board Audit Committees. However, some
exceptions apply depending on their charters (e.g. Maharlika Investment Corporation (MIC) and the
Philippine Deposit Insurance Corporation) (DOF, 2024[6]).

1.4.3. External audit and control mechanisms

GOCCs are generally not subject to third-party external independent audits, with some exceptions. For
instance, R.A. No. 11 954, Section 35, Article 35, requires the recently established MIC to engage an
internationally recognised auditing firm as its external auditor (DOF, 2024[6]). Also, under Section 26 of R.A.
No. 10 149, the Chairman of the GCG, when authorised by law, may direct an audit by independent
auditors as necessary.
However, the COA, designated by the Philippine Constitution as the supreme audit institution of the
government, remains as the main audit institution responsible for public sector entities, including GOCCs.22
GOCCs are under the obligation to submit financial reports to the COA of the Philippines quarterly and
annually based on GCG M.C. No. 2012-07. As the state audit institution, the COA has the authority to
examine all accounts including those related to revenues and expenditures involving funds, trusts and
properties owned or held by the government. With its external audit function, the COA ensures that GOCCs
uphold the necessary requirements with regards to financial reporting. The annual report by the COA is
published on its website.

1.4.4. Aggregate reporting by the GCG

The GCG releases aggregate information on SOE performance through its Integrated Corporate Reporting
(ICRS) system and annual reports. As part of its transparency measures and in line with the ongoing
digitalisation process, the GCG established the ICRS, a publicly accessible website 23 that serves as a

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database for GOCC-related information, including the GOCC’s mandate, profile, members of the governing
boards and annual performance scorecards. The GCG’s own annual reports also include aggregate
information on GOCCs, including details related to their financial and non-financial performance (GCG,
2024[1]).
While there are no explicit penalties for non-compliance with reporting requirements by GOCCs, timely
and accurate disclosure is a factor considered in the GCG’s annual performance evaluations of GOCCs,
which can affect the performance-based bonuses awarded to their officers and employees (GCG, 2024[1]).
GOCC officers and employees that are subject to civil service law may be disciplined, provided their acts
constitute offenses under applicable civil service laws or regulations (DOF, 2024[6]).

1.5. Board composition and responsibilities in state-owned enterprises

This section explores the responsibilities of boards governing GOCCs in the Philippines. It covers the legal
and regulatory framework for board appointments and composition, including the role of the GCG and the
“Fit and Proper Rule”. It also addresses key governance principles and related challenges concerning
independence and conflict-of-interest management, as well as performance evaluation.

1.5.1. Rules governing board practices

The governance framework for GOCCs in the Philippines is distinct from that of private companies in terms
of board composition, appointment and oversight authority. GOCC directors are appointed by the President
from a shortlist prepared by the GCG, following the Fit and Proper Rule 24 which mandates specific
qualifications tailored to each GOCC’s requirements. This contrasts with private limited liability and listed
companies, where directors are directly elected by shareholders during the annual general meeting.
However, for GOCCs with non-state shareholders, an annual general shareholders’ meeting is held to
formalise the appointment of directors representing non-state shareholders. While the President appoints
directors for state-owned shares, non-state shareholders elect their representatives during these meetings,
ensuring their interests are reflected in the board’s composition.
The Ownership and Operations Manual, as well as the Code of Corporate Governance for GOCCs, are
additional measures that govern board practices. The GCG’s role, which includes making
recommendations on the continuing education of directors, is also outlined under Section 16.2.3 (c) of
GCG M.C. No.2012-07 (GCG, 2024[1]). Additionally, unlike in private companies, GOCC boards may also
include government officials as ex officio board members, as stipulated in the GOCCs’ charters. 25 GCG
M.C. No.2012-07 also states that in terms of authority, GOCC boards are required to align their strategic
decisions with national development policies. The board composition highlights the unique role GOCCs
play in the public sector, blending corporate oversight with government objectives (GCG, 2024[1]).
In terms of conflicts of interest, Section 27.1 of GCG M.C. No. 2012-07 underlines the duties and
responsibilities of the directors and emphasises avoiding any potential conflict of interest with the GOCCs.
The Memorandum Circular also establishes that any question about a director’s or officer’s existing or
potential conflict of interest shall be forwarded to the board chair – who is in charge of reviewing and
deciding on the suitable action to take.

1.5.2. Responsibilities of the board

The individual and collective responsibilities of members of governing boards are outlined in the GOCC
charter or its articles of incorporation and by-laws, the GOCC’s Manual of Corporate Governance, and
GCG M.C. No. 2012-07. Sections 23 to 30 of the GCG M.C. No .2012-07 further specify the duties and
obligations of GOCC employees, including directors (GCG, 2024[1]).

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Section 7 of GCG M.C. No. 2012-0726 emphasises that the governing boards of GOCCs are responsible
for defining the corporate strategies of these entities. While the daily management of operations is
entrusted to the management, the board is tasked with providing policy directions, overseeing
management activities and supervising performance, as stipulated in the relevant legislation, including the
charter, articles of incorporation and applicable rules and regulations.
The legislation also mandates that the board must establish a clear vision, mission, objectives, policies
and procedures for GOCCs, while ensuring that the values and standards of the GOCCs align with best
practices. This is communicated through the GOCC's charter or other governing documents (GCG,
2024[1]). In terms of approving the corporate strategy, the legislation clearly delineates the board’s role.
However, this separation may become blurred in situations where government officials serve as ex officio
board members (see also section on “Board composition and independence”). Given these considerations,
it is crucial to have mechanisms in place that safeguard the independence and autonomy of the board.

1.5.3. Board structure

The GCG, through Memorandum Circular No. 2012-05 (Fit and Proper Rule) regulates the composition of
these boards, which varies between single-tier and two-tier structures depending on the GOCC’s charter
or governing documents. However, there is no standard type or size for GOCC boards, reflecting the
diverse nature of these enterprises. For chartered GOCCs, the composition of the board is stated in the
charter. For non-chartered GOCCs, the composition of the board is either stated in the articles of
incorporation and/or the bylaws governing the GOCCs.

Board nomination and appointment processes

GCG M.C. No. 2012-04 regulates the procedures for nominating and appointing directors, including
minimum qualifications, conditions for reappointment and disqualifications. Section 15 of R.A. No. 10 149
specifies that all board members must be appointed by the President from a shortlist prepared by the GCG,
following the “Fit and Proper Rule” 27 which mandates specific qualifications tailored to each GOCC’s
requirements.
These qualifications include integrity, competence and relevant experience, particularly in fields related to
corporate governance, finance, law and economics. Appointees must also possess managerial and
leadership skills. Additionally, some GOCC charters, articles, or by-laws may impose further qualifications,
such as sectoral or industry representation, or specific expertise in areas like agriculture, infrastructure, or
education.
According to Section 17 of R.A. 10 149, a director may be nominated by the GCG for reappointment by
the President if they receive an “above-average” or higher performance score, as evaluated through the
GCG’s Performance Evaluation for Directors process.28 Nominees must also submit various clearance
reports from entities such as the National Bureau of Investigation, the Sandiganbayan (Anti-Graft Court),
the Ombudsman and the Civil Service Commission, provide certificates of attendance to the Public
Corporate Governance Seminar and attend at least 75% of board meetings during their term (GCG,
2024[1]). Upon expiration of their term of office, the director continues in office in a hold-over capacity until
a successor is appointed (OECD, 2024[3]).

1.5.4. Board composition and independence

Many board members of GOCCs are government officials or serve in an ex officio capacity (i.e. as
government officials who automatically sit on boards due to their positions). While this may be intended by
design given that GOCCs blend corporate oversight with government objectives (GCG, 2024[1]), the
presence of ex officio directors may create a potential conflict of interest and potential for undue political

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interference, where such board members exercise concurrent roles as policy makers and/or sector
regulators.
Additionally, the Philippines does not require independent directors on GOCC boards. In contrast, there is
a mandatory requirement to have at least 20% of independent directors on the boards of publicly listed
companies (Philippines Stock Exchange, 2024[18]). In addition, the Code of Corporate Governance for
Publicly-Listed Companies of the Philippines recommends having at least one-third of board members as
independent directors. However, this is done based on a “comply” or “explain” principle and is not
compulsory (OECD, 2024[4]).
To enhance the effectiveness of SOE boards an appropriate minimum number of independent directors
can support objective oversight of management, reduce the risk of undue political interference, and ensure
that decisions are made in the best interest of the enterprise and its shareholders, taking into account the
interests of stakeholders. Many jurisdictions also set a maximum tenure for directors to be considered
independent. This is to maintain the independence of directors, as serving for long periods of time could
potentially result in loss of impartiality and effectiveness in monitoring the management, among other
related reasons.
Except for the MIC, the Philippines does not mandate any independent directors on the boards of GOCCs.
However, it may be noted that the Code of Corporate Governance for GOCCs encourages board members
to exercise independent decision-making and the Ownership and Operations Manual Governing the GOCC
Sector emphasises that boards should have full operational autonomy to achieve the GOCCs’ defined
objectives, with the national government refraining from involvement in day-to-day management.
The Philippine Constitution generally prohibits elected officials 29, cabinet members30 and public sector
representatives (who are considered public officials) 31 from serving as board members in GOCCs, with
some exceptions. They may serve as board members if it is allowed by law or by the primary functions of
their positions.
On the other hand, their participation is limited by the number of positions they can hold and benefits they
can receive. Section 7, Article IX-B of the 1987 Constitution, along with Sections 11 and 12 of the GCG
M.C. No. 2012-07, limits directors to two board seats across GOCCs, subsidiaries, or affiliates, as they are
considered trustees of the state. Section 49, Chapter 10, Book IV of E.O. No. 29232 also emphasises that
even when legally permitted, appointive directors may hold no more than two additional positions in
GOCCs. Their representation in other companies is prohibited to avoid conflicts of interest.
Section 14 of R.A. No. 10 149 governs the appointment of ex officio board members, allowing them to
designate alternates. These alternates must be next in rank, and their actions are considered the acts of
the principal. GCG M.C. No. 2012-08 further stipulates that alternates must be senior officers (Director III
level or higher) of the department or agency to which the GOCC is attached, and they must not already be
a board member of the GOCC.
Boards cannot be composed of executives, other than the CEO, who is the only management executive
allowed to sit on the board. If allowed by the charter or the by-laws of the GOCC, the role of board chair
can be held by the CEO. Section 18 clarifies that the CEO is elected by the board from among its members
(OECD, 2024[19]). The CEO shall be subject to the disciplinary sanctions of the board and may be removed
by the board if found violating the rules and regulations of the GOCC. 33
Regarding compensation, ex officio directors are generally not entitled to per diems or other emoluments.
Section 7(a) of E.O. No. 24, s.201 134 prohibits Department Secretaries, Undersecretaries, Assistant
Secretaries and other government officials serving as ex officio board members from receiving
compensation. However, GOCCs are required to cover necessary travel expenses related to attending
meetings (GCG, 2024[1]).

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1.5.5. Board duties, accountability and evaluation

Board duties are elaborated in Section 19 of R.A. No.10 149, which underlines that the board of directors,
trustees, and officers of the GOCCs have a legal obligation to act in the best interest of the GOCCs and in
good faith in their dealings. To this end, the Act outlines the following specific responsibilities for GOCC
board members:
a) Act with utmost and undivided loyalty to the GOCC.
b) Act with due care, extraordinary diligence, skill and good faith in the conduct of the business of the
GOCC.
c) Avoid conflicts of interest and declare any interest they may have in any particular matter before
the board.
d) Apply sound business principles to ensure the financial soundness of the GOCCs.
e) Elect and/or employ only officers who are fit and proper to hold such office with due regards to the
qualifications, competences, experience and integrity.
Furthermore, all GOCCs are audited by the COA, and for certain cases, the COA may recommend filling
charges against directors and officers engaging in wrongful acts.
Section 21 of R.A. No. 10 149, further states that “[t]he members of the board and the officers must
exercise extraordinary diligence in the conduct of the business and in dealing with the properties of the
GOCC. Such degree of diligence requires using the utmost diligence of very cautious person with due
regard for all the circumstances.” This is also reflected in Sections 23 to 30 of the GCG M.C. No. 2012-07.
In addition, if a member of the governing board is found to have violated the existing laws, rules and
regulations, applicable administrative, civil and criminal sanctions are applied. Similar to government or
public officials, board members of the GOCCs are also liable for violations of the R.A. No. 6 713 or the
“Code of Conduct and Ethical Standards for Public Officials and Employees” (GCG, 2024[1]).
In addition, members of the governing bodies are subject to criminal liabilities and may face harsh penalties
and sanctions for their actions. Complaints can be filed against them in the Office of the Ombudsman and
in the Sandiganbayan (the Anti-Graft Court of the Philippines) for violations of the Anti-Graft and Corrupt
Practices Act (R.A. No. 3 019).

1.5.6. Board evaluation

The GCG implements a performance evaluation for the board of directors through GCG M.C. No. 2014-
03. According to Section 4 of GCG M.C. No. 2012-04 (6th Issue), and Section 17 of R.A. No. 10 149 in
relation to GCG M.C. No. 2014-03 (4th Issue), or the “Performance Evaluation for Directors”, the results of
the board evaluations can be used in the re-appointment of the appointive directors by the GCG provided
that they receive “above average” or higher in the performance evaluation. Once the evaluations are
completed, the results are submitted to the Office of the President of the Philippines as well as to the
relevant supervising agencies the GOCCs are attached to (GCG, 2024[1]).
Section 17 of the GCG M.C. No. 2012-07 prescribes that “a systematic evaluation process of the board
shall be developed as a necessary tool …[t]o increase professionalism.” The performance evaluation
systems for directors includes, among other factors, “peer review, organisational performance, and board
attendance” (GCG, 2022[5]). The evaluation should be conducive to developing effective training
programmes for board members.
The GCG Corporate Governance Scorecard (GCG M.C. No. 2015-07) checks whether GOCCs carry out
an annual performance assessment for board of directors and its board committees as well as whether
GOCCs disclose the assessments, and the criteria used. According to the GCG, the GOCC corporate

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governance scorecards were developed based on the ASEAN corporate governance scorecards as well
as the OECD SOE Guidelines (GCG, 2024[1]).

1.6. Sustainability

Concerning SOEs and sustainability, the revised SOE Guidelines emphasise that the corporate
governance framework should provide incentives state ownership entities and SOEs to make decisions
and manage their risks in a manner that supports the sustainability and resilience of SOEs, ensuring the
creation of long-term value. The SOE Guidelines further specify that where the state has sustainability
goals, the state as owner should set concrete and ambitious sustainability-related expectations for SOEs,
including on the role of the board, disclosure and transparency, and responsible business conduct (OECD,
2024[2]).
This section explores the role of GOCCs in advancing sustainability and responsible business conduct in
the Philippines. It discusses the integration of environmental, social and governance (ESG) considerations
into SOE governance, including the state’s expectations, relevant laws and policies. The section also
highlights the challenges and gaps in aligning SOEs with national sustainability goals and outlines recent
initiatives to strengthen transparency, climate resilience and stakeholder engagement.

1.6.1. SOE corporate governance framework relevant to sustainability

The Philippines is particularly vulnerable to the impacts of climate change due to a number of factors,
including geological hazards and political and social factors. GOCCs in the Philippines often operate in
sectors with potentially high greenhouse gas (GHG) emissions: 43 of the Philippines’ 119 GOCCs operate
in hard-to-abate sectors such as energy and agriculture (GCG, 2022[5]). Hence, GOCCs play an important
role in achieving sustainability goals.
The Philippines has taken steps towards enhancing sustainability-related expectations for GOCCs,
including the government’s overall efforts and commitment to climate action and decarbonising the
economy (see Box 4). In 2023, the GCG introduced the Compliance to the Energy Efficiency and
Conservation Act (R.A. No. 11 285), which establishes a framework for introducing and institutionalising
policies on energy efficiency and conservation, and the delineation of responsibilities towards this end
between government agencies and private companies.
Furthermore, in June 2024, the GCG issued M.C. No. 2024-01 titled the “Enhanced Performance
Evaluation System for the GOCC Sector”, which integrates Disaster Risk Reduction and Management
(DRRM) and Gender Equity, Disability and Social Inclusion, into the Performance Evaluation System for
GOCCs. The Memorandum Circular emphasises the importance of SOEs enhancing their practices to
ensure they are adaptive and resilient to emerging climate threats. It also requires all GOCCs to adopt the
“Development and Implementation of the DRRM Plan” for 2025.
Additionally, Chapter VII of the GCG M.C. Circular 2012-07 states that GOCCs should “consider that there
are inevitable environmental impacts associated with daily operations” and that the goal of each GOCC
should be to minimise detrimental effects on the environment. The GCG Memorandum Circular notes that
GOCCs should consider the development and implementation of environmental standards towards these
goals.

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Box 4. Government’s overall efforts and commitment to climate action and decarbonisation
In recent years, the Philippines has scaled up its commitment to climate action and efforts to
decarbonise the economy. The government has committed to reaching the usage of 50% of renewable
energy in the electricity mix by 2040, while achieving economy wide energy savings of 24% over the
same period. In April 2021, the Philippines submitted its first Nationally Determined Contribution (NDC)
to the United Nations Framework Convention on Climate Change (UNFCCC), in which it pledged to a
75% reduction in emissions during the period of 2020-2030, 2.71% of which is unconditional and
72.29% is conditional on support from other countries or the implementation of the Paris Agreement.
Through the NDC, the Philippines also pledged to strengthening its resilience and adaptive capacity of
the country, including by improving access to climate finance, advancing technology development and
transfer, and strengthening capacity building, particularly in the implementation of policies and
measures related to adopting circular economy principles and promoting sustainable consumption and
production practices.
Furthermore, Chapter 15 of the Philippine Development Plan 2023-2028 focuses on accelerating
climate action and strengthening disaster resilience, pledging that the government strengthens cross-
sectoral convergence and co-ordination and implements a risk management approach to reduce
vulnerabilities and address complexities in the risks posed by climate change across different sectors.
It introduces a “strategy framework” focusing on three key priorities: 1) climate and disaster risk
resilience of communities and institutions increased; 2) ecosystem resilience enhanced; and 3) low
carbon economy transition enabled. The Plan further emphasises that the implementation of these
strategies requires “decisive and sustained financing, knowledge build-up, technology and innovation,
strong institutions, and concerted action among the government and its stakeholders at all levels”.
The government has also taken action to reduce its reliance on fossil fuels by implementing a higher
excise tax rate on petroleum products regulated by the R.A. No. 10 963, also known as the Tax Reform
for Acceleration and Inclusion.
In 2020, the government introduced a ban on new coal power plants. It has also taken action towards
low carbon generation: in April 2023, the President issued an Executive Order mandating a policy and
administrative framework for offshore wind development in the Philippines, including harmonisation in
the Energy Virtual One-Stop-Shop system.
Source: NDC (2021[20]) Nationally Determined Contribution from the Republic of the Philippines Communicated to the UNFCCC,
https://unfccc.int/sites/default/files/NDC/2022-06/Philippines%20-%20NDC.pdf; PDP (2023[21]) Philippine Development Plan 2023-2028,
https://pdp.neda.gov.ph/philippine-development-plan-2023-2028/; OECD (2024[22]) Clean Energy Finance and Investment Roadmap of the
Philippines, https://doi.org/10.1787/7a13719d-en.

Despite these steps, the Philippines’ s ownership policy, the GOCC Governance Act of 2011, does not
include sustainability or climate-related expectations for GOCCs. The OECD Secretariat has not been
made aware of plans to include climate-related expectations in future revisions of the Act.
Nonetheless, as described earlier, the government is in the process of updating the Code of Corporate
Governance for GOCCs which would include a new provision on the disclosure of material and reportable
non-financial and sustainability information, with emphasis on the management of EESG issues of GOCCs
businesses and operations. The proposed amendment on sustainability-related disclosure is also
described in earlier Section 1.4 of Disclosure and Transparency Measures.
It is worth noting that it mandates the ownership entity to “coordinate and monitor the operations of GOCCs,
ensuring alignment and consistency with the national development policies and programs.” In principle,
this means that GOCCs should align with any sustainability and climate-related targets specified the

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Philippine Development Plan 2023-2028. Although the plan emphasises the need for a co-ordinated
approach between the “government and stakeholders at all levels”, it does not include targets specifically
for GOCCs.
Currently there are no formal expectations on the role of boards in addressing sustainability-related risks
and opportunities. While this may be the case, the GCG holds an annual Technical Panel Meeting and
Performance Target Conference between government and GOCC management to evaluate and approve
the proposed Performance Scorecard of GOCCs, which includes sustainability-related targets.
Nonetheless, the GCG does not monitor SOEs’ alignment with sustainability-related expectations and
performance on a regular basis.

1.6.2. SOEs and responsible business conduct

The revised SOE Guidelines emphasise that the state as an owner should set high expectations for SOEs
observance of responsible business conduct standards together with effective mechanisms towards their
implementation, should fully recognise SOEs’ responsibilities towards stakeholders, and should request
that SOEs report on their relations with stakeholders.
Further, the SOE Guidelines delineate that stakeholders’ rights established by law or mutual agreements
should be recognised and respected by governments, state ownership entities and SOEs. Moreover, it
states that SOEs should develop and encourage meaningful stakeholder engagement in advancing
sustainability and ensuring a just transition, mechanisms for employee participation should be permitted to
develop and both SOEs, and ownership entities should take action towards ensuring a high standard of
integrity in the SOE sector.
The government’s commitment to maintaining open and transparent communication with stakeholders in
the GOCC sector is demonstrated in the 2022 Annual Report released by the GCG (See Box 5 below).
The report highlights measures such as Anti-Corruption and Integrity Programme (ACIP), which aim to
prevent corruption and enhance transparency and accountability in the governance and operations of
GOCCs. Additionally, open dialogue is encouraged to enable the GCG to receive feedback and concerns
from stakeholders, further improving the corporate governance of GOCCs.
GCG M.C. No. 2012-07 emphasises that GOCCs are required to be socially responsible and act as good
corporate citizens. Chapter VII of the Code specifies the GOCCs’ duty to be responsive to stakeholders;
directors assume responsibilities not only to the GOCC and its stakeholders but also with different
constituencies of stakeholders who have the right to expect that the GOCC is operated efficiently and in a
prudent manner.
Directors are also required to identify and recognise the GOCCs’ major and other stakeholders, identify
the nature of their interests, provide a hierarchy system of their conflicting interests in the GOCC, and have
a clear policy on communicating or relating to stakeholders “accurately, effectively and sufficiently”.
Employees of GOCCs are encouraged to share the vision of the GOCC and communicate with
stockholders and customers.
GCG M.C. No. 2015-04 requires a participatory process in the reorganisation of GOCCs and intends to
promote meaningful consultation and participation of employees and key stakeholders. It requires the
governing board and management of GOCCs to provide mechanisms for consultation and participation,
establish a governance structure and guidelines, and define the boundaries of decision-making.
While GOCCs are not required to develop their own internal codes of ethics, the Code of Corporate
Governance for GOCCs affirms that because GOCC directors are classified as public officials, they are
subject to the principles and provisions of the Code of Conduct and Ethical Standards for Public Officials
and Employees (R.A. No. 6 713) and are required to promote a high standard of ethics in public service.

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The whistleblowing policy is also now regulated by GCG M.C. No. 2025-01. Section 4 underlines that
whistleblowers may report to the GCG acts or omissions that are illegal or unethical, violate good
governance principles, are against public policy and morals, promote unsound and unhealthy business
practices, are grossly disadvantageous to the GOCC, the state, or the public (GCG, 2024[1]).
In terms of protection of whistleblowers, the information submitted by the GCG underlines that the existing
whistleblowing policy involves provision to provide protection to the whistleblower against retaliation. To
that end, it is stated that “retaliatory acts against whistleblowers who submit whistleblowing reports in good
faith shall not be tolerated by the GCG, which shall extend all possible assistance to the whistleblower
under the law and given the circumstances”. Item 7 under the Whistleblowing and Integrity Program the
GOCC sector aims at ensuring “confidentiality of the information submitted by the whistleblowers” (GGC,
2012[8]).

Box 5. Disclosure and transparency initiatives outlined in the 2022 Annual Report of the GCG
• The Report emphasises making the GOCC sector more “transparent, accountable, efficient”
and “socially responsible”. To that end, the GCG has initiated several transparency and
disclosure measures and policies.
• In 2022, the GCG implemented the Anti-Corruption and Integrity Programme (ACIP) to prevent
corruption, including bribery and other forms of misconduct, and to enhance transparency,
accountability, and ethical conduct in the governance and operations of the GOCCs. The
program foresees the establishment of the “Anti-Corruption Task Force”, which is expected to
produce guidelines for GOCCs to follow in order to prevent the misuse of public funds and other
forms of corruption in the SOE sector.
• The Report also highlights the importance of the government’s open communication with
stakeholders, facilitated by the “Compensation and Position Classification System” (CPCS)
dialogues. These open dialogues aim at enabling the government to receive feedback and
concerns from stakeholders to enhance the corporate governance of GOCCs. However, specific
information on the feedback received from stakeholders and the extent to which it has been
reflected in the GOCC policies is not publicly available, making it difficult to assess whether the
mechanism and the feedback have been useful to improve the governance practices in the SOE
sector in the country.
Source: GCG (2022[5]) Annual Report, Summary of Financial Statements, https://icrs.gcg.gov.ph/financial-overview/.

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References

DBM (2024), Interview with the Department of Budget and Management of the Philippine [7]
Government.

DOF (2024), Interview with the Department of Finance of the Philippine Government. [6]

GCG (2024), Questionnaire Responses Submitted to the OECD Secretariat by the Government [1]
of the Philippines.

GCG (2022), Annual Report, Summary of Financial Statements, https://icrs.gcg.gov.ph/financial- [5]

overview/.

GCG (2012), The First 200 Days Report, https://gcg.gov.ph/files/Qj7mKS7pDWg4O5aTRrEf.pdf. [16]

GGC (2012), Code of Corporate Governance for GOCCs, [8]

https://icrs.gcg.gov.ph/public_files/GCGMC%202012-07.pdf.

Government of Philippines (2024), New Government Procurement Act (Republic Act No. 12009), [15]
https://ngpa.gppb.gov.ph/New-Government-Procurement-Act-RA-12009.pdf.

IMF (2020), Chapter 3: State Owned Enterprises in the “Fiscal Monitor: Policies to Support [23]
People During the Covid-19 Pandemic”.

NDC (2021), Nationally Determined Contribution from the Republic of the Philippines [20]
Communicated to the UNFCCC on 15 April 2021,
https://unfccc.int/sites/default/files/NDC/2022-06/Philippines%20-%20NDC.pdf.

OECD (2024), Capital Markets Review of the Philippines, OECD Publishing, Paris, [4]
https://doi.org/10.1787/80afb228-en.

OECD (2024), Clean Energy Finance and Investment Roadmap of the Philippines, Green [22]
Finance and Investment, OECD Publishing, Paris, https://doi.org/10.1787/7a13719d-en.

OECD (2024), Competitive Neutrality Toolkit: Promoting a Level Playing Field, OECD Publishing, [9]
Paris, OECD Publishing, Paris, https://doi.org/10.1787/3247ba44-en.

OECD (2024), Guidelines on the Corporate Governance of State Owned Enterprises, OECD [2]
Publishing, Paris, https://doi.org/10.1787/18a24f43-en.

OECD (2024), Ownership and Governance of State Owned Enterprises: A Compendium of [19]
National Practices, OECD Publishing, Paris, https://doi.org/10.1787/395c9956-en.

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  39

OECD (2024), Remuneration of Boards of Directors and Executive Management in SOEs in [3]
Asia, OECD Business and Finance Policy Papers, No. 73, OECD Publishing, Paris,
https://doi.org/10.1787/53f926e3-en.

OECD (2021), Recommendation of the Council on Competitive Neutrality, OECD/LEGAL/0462, [24]

https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0462.

OECD (2021), The Promotion of Competitive Neutrality by Competition Authorities - Contribution [11]
from the Philippines, https://one.oecd.org/document/DAF/COMP/GF/WD(2021)23/en/pdf.

OECD (2020), OECD Competitive Neutrality Reviews: Philippines, Small-Package Delivery [10]
Services, Competition Law and Policy Reviews, OECD Publishing, Paris,
https://doi.org/10.1787/8d8a81cb-en.

OECD (2015), Recommendation of the Council on Public Procurement, OECD/LEGAL/0411, [14]

https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0411.

PCC (2024), Interview with the Philippine Competition Commission. [13]

PDP (2023), Philippine Development Plan 2023-2028, https://pdp.neda.gov.ph/philippine- [21]

development-plan-2023-2028.

Philippines Department of Budget and Management (2008), Circular Letter, [17]

https://www.dbm.gov.ph/wp-content/uploads/Issuances/2008/Circular%20Letter/CL2008-
5/cl2008-5.pdf.

Philippines Stock Exchange (2024), PSE, https://www.pse.com.ph/ipo-listing- [18]

requirements/#listing1.

U.S. Department of State (2023), 2023 Investment Climate Statements: Philippines, [12]
https://www.state.gov/reports/2023-investment-climate-statements/the-philippines/.

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Notes

1 Chartered GOCCs refer to GOCCs that are created and assigned functions with a special law. See:
Governance Commission for GOCCs (GCG) Corporate Website.
2 The value of the enterprises was calculated by the Philippines using the exchange from 29 December

2024 rate between Philippine Perso and USD numbers: PHP 55 567 to USD 1 000.
3 Based on Total Employment for 2023 as reported by the Philippine Statistics Authority: Unemployment

Rate in December 2023 was Estimated at 3.1% | Philippine Statistics Authority | Republic of the Philippines
(psa.gov.ph).
4 These include the Quezon City Development Authority (2014), Davao International Airport Authority

(2018), and Maharlika Investment Corporation (2023). The Maharlika Investment Corporation (MIC) is the
government-owned entity responsible for managing the Maharlika Investment Fund (MIF), which serves
as the Philippines' sovereign wealth fund. Its purpose is to generate returns and support national
development through investments in financial instruments, infrastructure, and various sectors. MIC's
investment decisions are made by its Investment and Risk Management Committee, which considers
market-based returns along with the potential economic impact, aiming to balance profitability with national
interests.
5
It is also important to note that while the LBP is covered under the Dividend Law, it received cash
allocations as regulated by R.A. No. 11 469. While E.O. No. 43 (s.2023) reduced the LBP’s dividend rate
to 0% for 2023, the LBP has since remitted PHP 32.1 billion (~ USD 551 337 546.45) dividends in 2024.
6
For additional information, see Department of Finance (DOF) Circular No. 001-2016, which provides the
guidelines and procedures of extension of guarantees by the national government for GOCC and GIF
borrowings.
7 The issuance further provides that GOCCs’ compliance will be a necessary condition for the grant of

performance-based bonus for the GOCC personnel.

8 See: PCC, GCG ink partnership for Competitive Neutrality Promotion, ASEAN Competition Centre,

https://asean-competition.org/read-news-pcc-gcg-ink-partnership-for-competitive-neutrality-promotion
9 Section 41, GCG Memorandum Circular No. 2012-07.

10
See: https://web.senate.gov.ph/lisdata/98058366!.pdf
11 IPSAS 30 and IFRS 7 – Financial Instruments: Disclosures.

12 Section 46, GCG Memorandum Circular No. 2012-07 (GCG, 2024 ).

[1]
13 The R.A. 10 149 is accessible at:https://www.officialgazette.gov.ph/2011/06/06/republic-act-no-10149/

14 Under R.A. No. 10 149, this refers to guidelines and rules pertaining to the ownership by the State or

corporations and enterprises or the exercise of such ownership governing the GOCCs or any classification
thereof.
15 Code of Conduct and Ethical Standards for Public Officials and Employees.

16 Fit and Proper Rule for Appointive Directors and CEOs of GOCCs.

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17 Section 2.3 of DBM Circular Letter No. 2008-5 (Guidelines in the Organization and Staffing of an Internal
Audit Service/Unit and Management Division/Unit in Departments/Agencies/GOCCs/GFI Concerned),
dated 14 April 2008.
18 The term governing board refers to the board of directors.

19 Item 2(c) Chapter 3 of the Revised Philippine Government Internal Audit Manual of 2020.

20 Section 8(j), GCG Memorandum Circular No. 2012-07.

21 Section 16.2.2, GCG Memorandum Circular No. 2012-07.

22 Development Bank of the Philippines v. Commission on Audit, G.R. No. 88 435, Jan. 16, 2002.

23 Accessible via: https://icrs.gcg.gov.ph/

24 GCG Memorandum Circular No. 2012-05.

25 Under Section 3(i) of Republic Act No. 10 149, “Ex Officio Board Member” refers to any individual who

sits or acts as a member of the Board of Directors/ Trustees by virtue of one’s title to another office, and
without further warrant or appointment.
26 Corporate Governance Code for the GOCCs (28 November, 2012).

27 GCG Memorandum Circular No. 2012-05.

28 GCG M.C. No. 2014-03 (4th Issue), available at https://gcg.gov.ph/memorandum-circulars/.

29 Article Vi, Section 13 ; Article Vii, Section 13.

30 Article VII, Section 13.

31 Article IX, Section 2 ; Article IX-B, Section 2.

32 Administrative Code of 1987.

33
Prescribing Rules to Govern the Compensation of Members of the Board of Directors/Trustees in
Government-Owned or Controlled Corporations Including Government Financial Institutions, adopted
under GCG M.C. No. 2012-02, available at https://www.dbm.gov.ph/wp-content/uploads/2012/03/EO-
24.pdf.

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